Exhibit 10.2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), made as of this 5th day
of April, 2007, is by and between FIVE STAR GROUP, INC., a Delaware corporation
with principal offices at 10 East 40th Street, Suite 3110, New York, New York
10016 (the "Company"), and RONALD KAMPNER, residing at 27 Pines Bridge Road,
Amawalk, New York 10501 (the "Executive"). FIVE STAR PRODUCTS, INC., a Delaware
corporation with principal offices at 10 East 40th Street, Suite 3110, New York,
New York 10016 ("FSP"), joins in this Agreement solely with respect to Section
3.3.
W I T N E S S E T H:
WHEREAS, FSP intends to acquire the assets of Right-Way Dealer
Warehouse, Inc. ("Right-Way");
WHEREAS, this Agreement is contingent upon the approval by the United
States Bankruptcy Court for the District of Massachusetts of the acquisition of
Right-Way by FSP and pursuant to a certain Asset Purchase Agreement, the closing
of the transaction involving the acquisition of Right-Way by FSP ("Closing");
WHEREAS, effective upon the date of the Closing ("Closing Date"), the
Executive shall be hired by the Company as its Senior Vice President of Sales
pursuant to the terms of this Agreement;
WHEREAS, the Company desires to retain the Executive upon the terms and
conditions set forth below; and
WHEREAS, the Executive desires to render services to the Company upon
the terms and conditions set forth below.
NOW THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. Nature of Employment. The Company hereby employs the Executive
pursuant to the terms set forth in this Agreement, and the Executive hereby
accepts such employment. The Executive shall perform the duties of Senior Vice
President of Sales of the Company, which duties shall include primarily
supervising sales and marketing in New England and Westchester County, New York;
supervising the Brooklyn Cash & Carry Business; and such other duties as the
Company may from time to time reasonably assign to him. The Executive shall
devote his full time, energies, skills, and attention to the performance of his
duties and responsibilities hereunder, and shall perform them faithfully,
diligently, and competently. The Executive shall report to the Company's Chief
Executive Officer.
2. Term of Employment. The term of this Agreement shall commence on the
Closing Date and continue until the third anniversary of the Closing Date (the
"Term"), unless otherwise extended by written agreement of the parties or
reduced as provided herein.
3. Compensation and Benefits.
During the Term, the Executive shall be entitled to receive
compensation from the Company as set forth below:
3.1 Base Salary.
During the Term, the Company shall pay the Executive a salary
at the rate of $200,000 per annum (the "Base Salary"), or such greater sum as
may from time to time be fixed in accordance with the Company's salary review
policy for senior executives then in effect. Payments of Base Salary to the
Executive shall be subject to such payroll deductions as are required by law,
with deductions for employee benefits in accordance with Company practice or as
selected by the Executive in accordance with the terms of Company employee
benefit plans, and shall be payable in accordance with the customary payroll
practices of the Company.
3.2 Incentive Compensation.
(a) The sales incentive program set forth in this Section 3.2
is based on the business model as well as marketing and sales practices
currently known to the parties. It is acknowledged that any material change to
such practices may have an impact on Executive's ability to earn the sales
incentives set forth in Section 3.2. Accordingly, in the event that the Company
intends to make a material change (e.g., dropping a product line) that may have
an effect on sales volume, the Company agrees to consult with the Executive
before implementing any such changes.
(b) Brooklyn Cash & Carry Business Sales Incentive. During the
Term, the Executive shall be eligible to earn an annual bonus equal to two
percent (2%) of all Brooklyn Cash & Carry Business sales booked (in accordance
with the Company's then prevailing accounting treatment for recognizing sales in
connection with the preparation of its annual audited financial statement) by
December 31 of each year during the Term above an annual "Threshold." For
purposes of this Section 3.2(b), the Threshold amount for the year ended
December 31, 2007 will be $8,000,000, prorated for the balance of the year
between the Closing Date and December 31, 2007. In 2008 and for each successive
year during the Term, the Threshold amount will increase by five percent (5%)
over the prior year's Threshold amount with partial years during the Term being
prorated. The Brooklyn Cash & Carry Business means the business of Right-Way
generally conducted at the building located at 1202 Metropolitan Avenue,
Brooklyn, New York over the past two years. The Brooklyn Cash & Carry Business
Sales Incentive will be paid to the Executive by the Company no later than March
31 of each year during the Term.
(c) Right-Way Transferred Sales Incentive. During the Term,
the Executive shall be eligible for an annual bonus with respect to "Right-Way
Distribution Business Successfully Transferred To The Company" (as defined in
Section 3.2(c)(4)), if any, as follows:
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(1) One-half percent (1/2%) of all Right-Way
Distribution Business Successfully Transferred To The
Company, up to the "Designated Amount" (as defined in Section 3.2(c)(3)); and
(2) One percent (1%) of all Right-Way Distribution
Business Successfully Transferred To The Company, above the Designated Amount.
(3) For purposes of this Section 3.2(c), the
"Designated Amount" for the year ended December 31, 2007 will be $15,000,000,
prorated for the balance of the year between the Closing Date and December 31,
2007. For the year ended December 31, 2008 and for each successive year
thereafter, the Designated Amount will increase by five percent (5%) over the
prior year's Designated Amount, with partial years during the Term being
prorated.
(4) For purposes of calculating "Right-Way
Distribution Business Successfully Transferred To The Company," the parties
stipulate that such sales will include all sales (excluding sales by the
Brooklyn Cash & Carry Business) booked by the Company with respect to Qualified
Right-Way Customers by December 31 of each year of the Term reduced in each year
by sales by the Company to such Qualified Right-Way Customer for the year ended
December 31, 2006 (pro rata for any partial calendar year during the Term). A
Qualified Right-Way Customer is a person (excluding persons doing business with
Right-Way solely through the Brooklyn Cash & Carry Business) to which during the
year ended December 31, 2006, Right-Way made sales (excluding sales at the
Brooklyn Cash & Carry Business) in excess of $4,000. The Executive shall prepare
in good faith a list of all Qualified Right-Way Customers prior to the Closing
("Qualified Right-Way Customer List").Immediately after the Closing, the
Executive shall provide to the Company the Qualified Right-Way Customer List
which the parties shall review in good faith and which shall be approved by the
Company and made part of this Agreement with such approval not to be
unreasonably withheld. The Right-Way Transferred Sales Incentive will be paid to
the Executive by the Company no later than March 31 of each year of the Term.
3.3 Stock Options. On the Closing Date, FSP shall grant to the
Executive options to acquire two hundred thousand (200,000) shares of FSP stock
under the FSP 2007 Incentive Stock Plan (the "Plan") subject to shareholder
approval of the Plan on or prior to March 1, 2008 (the "Options"), it being
understood that failure to obtain shareholder approval of the Plan on or prior
to March 1, 2008 shall be considered a material breach of this Agreement. The
Options will be issued at an exercise price equal to "Fair Market Value" (as
defined by the Plan) of FSP stock on the Closing Date or, if the Closing Date
occurs on a day when United States equity securities markets are not open, on
the next succeeding day when such securities markets are open. Vesting of the
Options will be over a three (3) year period commencing with calendar year 2007
and will be subject to provisions requiring achievement of a FSP-specified
Earnings Before Interest, Taxes, Depreciation, and Amortization ("EBITDA")
target. In addition, the agreement evidencing the Options ("Stock Option
Agreement) will reflect the same basic provisions as provided in the option
agreements applicable to other senior executives of FSP granted on March 1, 2007
and will be subject to any provisions required under the Plan. A true copy of
the Stock Option Agreement evidencing the proposed grant of the Options to the
Executive is attached hereto and made part of this Agreement.
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3.4 Benefits. The Executive shall be eligible to participate
in all insurance and benefit programs available to senior executives of the
Company, subject to the provisions of the various benefit plans and programs in
effect from time to time, including but not limited to, medical, life insurance,
and the Company's 401(k) program.
3.5 Automobile. During the Term, in order to facilitate the
performance of the Executive's duties hereunder, and otherwise for the
convenience and in the interest of the Company, the Company shall provide to the
Executive a Company-owned or Company-leased automobile and will pay all
operating expenses incurred by the Executive in connection therewith. The
portion of the use of said automobile devoted to personal use shall be reflected
in the Executive's W-2 provided by the Company.
3.6 Death or Disability. The Term shall end on the date of
death of the Executive or the date on which an independent medical examiner
determines that due to physical or mental impairment of the Executive, the
Executive is unable to perform his duties for ninety (90) days in any one
hundred eighty (180) day period.
4. Confidentiality. While employed by the Company and thereafter, the
Executive shall not, directly or indirectly, disclose to anyone outside of FSP
or the Company any "Confidential Information" (as defined below) or use any
Confidential Information other than pursuant to the Executive's employment with
the Company or with the Company's written consent.
For purposes of this agreement, "Confidential Information"
shall mean all data or information regarding FSP or the Company not generally
known outside of FSP or the Company whether prepared or developed by or for FSP
or the Company or received by FSP or the Company from any outside source,
including, without limitation, any trade secrets; customer files, customer
lists, lists of prospective customers, or details of agreements with customers;
any business, marketing, financial or sales records, formulae, methods of
operation, software and related manuals, data, plans, or surveys; and any other
record or information relating to the present or future business or products of
FSP or the Company. All Confidential Information and copies thereof are the sole
property of FSP or the Company. Confidential Information shall not include
information that FSP or the Company has voluntarily disclosed to the public or
information that has otherwise lawfully entered the public domain.
5. Non-Disparagement. While employed by the Company and thereafter, the
Executive will not make any disparaging statements to any current or former FSP
or Company employees or customers, to any media, or to any other person. A
disparaging statement is any comment, oral or written, that is intended by the
Executive to cause humiliation or embarrassment or cause the recipient to
question the business condition, integrity, competence, or good character of any
of these persons or entities.
6. Non-Solicitation and Covenant Not to Compete.
(a) Non-Solicitation. Following the termination of his
employment with the Company, the Executive agrees that, for a period of one (1)
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year after the date thereof, he will not, directly or indirectly, solicit any
customer of the Company for the purpose of selling to such customer products,
processes, goods, or services the sale of which would constitute "Competition"
(as defined in Section 6(d)).
(b) Covenant Not to Compete. The Executive agrees, that for a
period of one (1) year after his employment with the Company terminates, he will
not, directly or indirectly:
(1) Engage in any Competition in any "Restricted
Territory" (as defined in Section 6(d)); or
(2) Be or become an employee, agent or consultant
of, or acquire or have any proprietary or equity interest in (except as the
holder of less than one percent (1%) of the outstanding common stock of any
publicly traded companies), or otherwise participate or assist in the business
of, any person who engages in any Competition in any Restricted Territory.
(c) If at any time the provisions of this Section 6 shall be
determined to be invalid or unenforceable, by reason of being vague or
unreasonable as to area, duration or scope of activity, this Section 6 shall be
considered divisible and shall become and be immediately amended to only such
area, duration, and scope of activity as shall be determined to be reasonable
and enforceable by the court or other body having jurisdiction over the matter;
and the Executive agrees that this Section 6 as so amended shall be valid and
binding as though any invalid or unenforceable provision had not been included
herein.
(d) For purposes of this Sections 6, "Competition" shall mean,
directly or indirectly, engaging in activities competitive with, or rendering
services to any firm or business engaged or about to become engaged in, any
material line of business in which the Company is then engaged and as to which
the Executive had involvement and/or acquired or received Confidential
Information during his employment with the Company. For purposes of this Section
6, "Restricted Territory" shall mean the United States of America, its
territories, and possessions (including Puerto Rico).
(e) Breach of Non-Solicitation and Covenant Not to Compete.
(1) If the Executive commits a breach or the
Company has reasonable grounds to believe that the Executive is about to
commit a breach, of any of the provisions of this Section 6, the Company shall
have the right to have the provisions of this Agreement specifically enforced
by any court having equity jurisdiction without being required to post bond or
other security and without having to prove the inadequacy of the available
remedies at law, it being acknowledged and agreed that any such breach or
threatened breach will cause irreparable injury to the Company and that money
damages will not provide an adequate remedy to the Company.
(2) In addition, the Company may also take all such
other actions and remedies available to it under law or in equity and shall be
entitled to such damages as it can show it has sustained by reason of such
breach.
7. Termination by the Company for Cause.
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(a) Notwithstanding the provisions of Section 2, the Company
may terminate this Agreement and the Executive's employment at any time during
the Term, with or without "Cause," as defined hereafter. For purposes of this
Agreement, "Cause" shall mean any one or more of the following:
(1) The Executive's conviction of a crime
constituting a felony;
(2) The Executive's gross negligence, recklessness,
or malfeasance in the performance of duties hereunder which in the Board of
Directors of the Company reasonable judgment has caused or is likely to cause
material harm to the Company ; or
(3) The Executive's willful failure to follow
directives of the Board of Directors of FSP or the Chief Executive Officer of
the Company or FSP regarding his obligations under this Agreement after written
notice of such failure to the Executive and following the Executive's failure to
cure the willful failure specified in the written notice within thirty (30) days
of receipt of said notice.
(b) If the Company terminates the Executive's employment with
Cause, the Executive shall, as of the date of such termination:
(1) Be entitled to receive:
(i) Base Salary earned but not paid; and
(ii) Any other benefits, as applicable under
the respective employee benefit plan.
(2) Forfeit any unpaid bonus; and
(3) Forfeit any unvested options to acquire
securities issued by FSP, which have been granted to the Executive by FSP.
8. Notices. All notices or other communications required or permitted
hereunder shall be in writing and shall be delivered personally, telegraphed,
telexed, faxed, or sent by certified, registered or express mail, postage
prepaid and in each case return receipt requested, if to the Executive, at his
residence address shown above, if to the Company or FSP, to its principal office
address shown above, attention to the Secretary of the Company or the Secretary
of FSP, as applicable, or to such other addresses as may be designated in
writing by the Company, FSP, or the Executive from time to time.
9. Withholding of Taxes. The Company is authorized to withhold, from
any benefit provided or payment due hereunder, the amount of withholding taxes
due any Federal, state, or local authority in respect of such benefit or payment
and to take such other action as may be necessary in the opinion of the Company
to satisfy all obligations for the payment of such withholding taxes.
10. Severability; Survival. In the event any provision or portion of
this Agreement is determined to be invalid or unenforceable for any reason, in
whole or in part, the remaining provisions of this Agreement shall nevertheless
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be binding upon the parties with the same effect as though the invalid or
unenforceable part had been severed and deleted. The respective rights and
obligations of the parties hereunder shall survive the termination of this
Agreement to the extent necessary to the intended preservation of such rights
and obligations.
11. Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York applicable to agreements made
and to be performed entirely within New York.
12. Arbitration. In the event of any dispute, controversy, or claim
arising out of or relating to this Agreement, or any breach of this Agreement,
the parties hereby agree to submit such dispute, controversy, or claim to
arbitration and that the determination in such arbitration shall be final and
binding. Arbitration shall be effected by a panel of three (3) arbitrators in
accordance with the employment arbitration rules then in force of the American
Arbitration Association, which shall administer the arbitration and act as
appointing authority. Any such arbitration, including the rendering of an
arbitration award, shall take place in New York City, New York, or such other
place as may be mutually agreed upon at the time by the parties to the
arbitration. The arbitrators shall have no power to add to, subtract from, or
otherwise modify the terms of this Agreement or to grant injunctive relief of
any nature. Any judgment upon the award of the arbitrators may be entered in any
court having jurisdiction thereof. The arbitrators may award costs and expenses
of the arbitration to the prevailing party.
13. Assignment. The Executive may not assign his obligations hereunder.
The rights of the Executive and the rights and obligations of the Company
hereunder shall inure to the benefit of and shall be binding upon the parties
hereto and their respective heirs, executors, administrators, successors, and
assigns.
14. Headings. The headings in this Agreement are inserted solely for
convenience of reference and shall not affect the interpretation of this
Agreement.
15. No Conflict. The Executive represents and warrants that he is not
subject to any agreement, instrument, obligations, order, judgment, or decree of
any kind, or any other restrictive agreement or obligation of any character,
which would prevent him from entering into this Agreement or which would be
breached by him upon the performance of his duties pursuant to this Agreement.
16. Entire Agreement. This Agreement constitutes the entire agreement
between the parties as of the date hereof with respect to the employment of
Executive by the Company and cannot be amended or terminated orally. This
Agreement supersedes all prior agreements, understandings, representations, and
statements, whether oral or written, concerning the employment of Executive by
the Company.
17. Amendments. This Agreement may be amended, superseded, canceled,
renewed, or extended, and the terms hereof may be waived, only by a written
instrument signed by the parties or, in the case of a waiver, by the party
waiving compliance. Notwithstanding the preceding sentence, the Company or FSP
may at any time or from time to time amend, modify, suspend, or terminate any
bonus, incentive compensation, or other benefit plans or programs provided
hereunder for any reason and without the Executive's consent.
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IN WITNESS WHEREOF, the parties, intending to be legally bound in
accordance with its terms as of the date first above written, executed this
Agreement.
FIVE STAR PRODUCTS, INC. FIVE STAR GROUP, INC.
By: /s/JOHN C. BELKNAP By: /s/ JOHN C. BELKNAP
------------------ -------------------
Name: John C. Belknap Name: John C. Belknap
Title: Vice President Title Vice President
/s/ RONALD KAMPNER
Ronald Kampner
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FIVE STAR PRODUCTS, INC.
STOCK OPTION AGREEMENT
AGREEMENT, dated April 5, 2007 (the "Grant Date"), between Five Star
Products, Inc., a Delaware corporation (the "Company"), with an address at 10
East 40th Street, Suite 3110, New York, NY 10016, and Ronald Kampner (the
"Grantee"), with an address at 27 Pines Bridge Road, Amawalk, New York 10501.
WHEREAS, the Board of Directors of the Company has, on the Grant Date,
pursuant to the Five Star Products, Inc. 2007 Incentive Stock Plan, a copy of
which is annexed hereto as Exhibit A (the "Plan"; capitalized terms used but not
defined herein having the meanings ascribed thereto in the Plan), granted to the
Grantee options to purchase shares of the common stock, par value $.01 per
share, of the Company (the "Common Stock"), as hereinafter set forth, and
authorized the execution and delivery of this Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
The Grantee is hereby granted options (the "Options") to purchase from
the Company, subject to the terms and conditions set forth in this Agreement,
all or any part of 200,000 shares of Common Stock (the "Option Shares") at an
initial purchase price of $0.75 per share; provided, however that
notwithstanding any other provision of this Agreement, the Options granted are
contingent upon approval of the Plan by the shareholders of the Company as
provided in Section 16 hereof.
Subject to Section 16, the Options shall be exercisable as follows and
subject to the continuous employment of the Grantee with the Company or a
Related Company until the applicable vesting date:
Unless sooner terminated as hereinafter provided, this Option
shall become vested and exercisable with respect to up to 33.3% of the Option
Shares on the date of filing (such filing date, the "1st Vesting Date") of the
Company's Annual Report on Form 10-K ("Form 10-K") with the Securities and
Exchange Commission (the "SEC") for the fiscal year ending December 31, 2007
("Fiscal 2007"), subject to the Company's achieving Adjusted EBITDA (as defined
below) of at least $5,000,000 for Fiscal 2007. For purposes of this Agreement
"Adjusted EBITDA" means earnings before interest, taxes, depreciation,
amortization and extraordinary items and Nonrecurring Items (as defined in the
Plan), all determined in accordance with generally accepted accounting
principles consistently applied.
Unless sooner terminated as hereinafter provided, this Option
shall become vested and exercisable with respect to up to an additional 33.3% of
the Option Shares on the date of filing (such filing date, the "2nd Vesting
Date") of the Company's Form 10-K with the SEC for the fiscal year ending
December 31, 2008 ("Fiscal 2008"), subject to the Company's achieving Adjusted
EBITDA of at least $7,500,000 for Fiscal 2008.
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Unless sooner terminated as hereinafter provided, this Option
shall become vested and exercisable with respect to up to an additional 33.4% of
the Option Shares on the date of filing (such filing date, the "3rd Vesting
Date") of the Company's Form 10-K with the SEC for the fiscal year ending
December 31, 2009 ("Fiscal 2009"), subject to the Company's achieving Adjusted
EBITDA of at least $11,250,000 for Fiscal 2009.
If, on the 3rd Vesting Date, the Company's aggregate Adjusted
EBITDA for fiscal year 2007, fiscal year 2008 and fiscal year 2009 equals or
exceeds $23,750,000, then any Option Shares that did not vest on the 1st Vesting
Date, 2nd Vesting Date or 3rd Vesting Date shall become vested and exercisable
on the 3rd Vesting Date.
Notwithstanding any other provision of this Agreement to the
contrary, in the event that Grantee is employed by the Company or a Related
Company as of the end of the fiscal year 2007, 2008 or 2009, Grantee shall be
entitled to the vesting of this Option for that fiscal year, as set forth above,
regardless of whether Grantee's employment terminates prior to the formal
determination of vesting (i.e., based on Adjusted EBITDA calculations) for such
fiscal year, as set forth above.
Subject to Section 16, the Options shall automatically become vested
and shall be immediately exercisable in full upon the occurrence of a Change in
Control of the Company or its parent, National Patent Development Corporation
("NPDC"). For purposes of this Agreement, a "Change in Control" of the Company
shall be deemed to have occurred if (i) National Patent Development Corporation
("NPDC") and its affiliates cease to own a majority of the voting stock of the
Company or (ii) within any 12-month period beginning on or after the date that
is three months after the date hereof, the persons who were directors of the
Company immediately before the beginning of such period (the "Company Incumbent
Directors") shall cease (for any reason other than death) to constitute at least
a majority of the Board of Directors of the Company or the board of directors of
any successor to the Company, provided that any director who was not a director
of the Company immediately before the beginning of such period shall be deemed
to be a Company Incumbent Director if such director was elected to the Board of
Directors of the Company by, or on the recommendation of or with the approval
of, at least two-thirds of the directors who then qualified as Company Incumbent
Directors either actually or by prior operation of this Section 3, unless such
election, recommendation or approval was the result of an actual or threatened
election contest of the type contemplated by Regulation 14a-11 promulgated under
the Exchange Act. For purposes of this Agreement, a "Change in Control" of NPDC
shall be deemed to have occurred if (i) a change in control of NPDC of a nature
that would be required to be reported in response to Item 5.01 of Current Report
on Form 8-K pursuant to Section 13 or 15(d) of the Exchange Act, other than a
change of control resulting in control by Grantee or a group including Grantee
occurs, (ii) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act), other than Grantee or a group including Grantee, is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
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Act), directly or indirectly, of securities of NPDC representing 20% or more of
the combined voting power of NPDC's then outstanding securities, or (iii) within
any 12-month period beginning on or after the date that is three months after
the date hereof, the persons who were directors of NPDC immediately before the
beginning of such period (the "NPDC Incumbent Directors") shall cease (for any
reason other than death) to constitute at least a majority of the Board of
Directors of NPDC or the board of directors of any successor to NPDC, provided
that any director who was not a director of NPDC immediately before the
beginning of such period shall be deemed to be a NPDC Incumbent Director if such
director was elected to the Board of Directors of NPDC by, or on the
recommendation of or with the approval of, at least two-thirds of the directors
who then qualified as NPDC Incumbent Directors either actually or by prior
operation of this Section 8(d), unless such election, recommendation or approval
was the result of an actual or threatened election contest of the type
contemplated by Regulation 14a-11 promulgated under the Exchange Act of or any
successor provision. Notwithstanding the foregoing, no Change of Control shall
be deemed to occur as a result of the beneficial ownership of securities of NPDC
by Bedford Oak Advisors, LLC, Bedford Oak Partners, L.P. or Harvey P. Eisen.
All Options shall terminate and thereafter no longer be exercisable
(subject to Section 8) on April 4, 2017 (the "Expiration Date").
Option Shares purchased pursuant to this Agreement shall be paid for in
full at the time of purchase. Payment may be made in cash, check, attestation of
shares of Common Stock, or a combination thereof, provided that such
consideration shall be such that the Option Shares shall be fully paid and
nonassessable. If payment is made in whole or part by tender of shares of Common
Stock, such shares shall be valued at the Fair Market Value thereof. Upon
receipt of written notice of exercise of Options in the form attached hereto as
Exhibit B together with payment and delivery of any other required
documentation, the Company shall, without stock transfer tax to the Grantee or
any other person entitled to exercise such Options, deliver to the person
exercising such Options a certificate or certificates for the Option Shares so
purchased. It shall be a condition to the performance of the Company's
obligation to issue or transfer Common Stock upon exercise of Options that the
Grantee or other person exercising such Options pay, or make provision
satisfactory to the Company for the payment of, any taxes (other than stock
transfer taxes) which the Company is obligated to collect with respect to the
issue or transfer of Common Stock upon exercise, including any Federal, state,
or local withholding taxes.
No person shall have any rights as a stockholder with respect to any
Option Shares until the date a stock certificate is issued to such person for
such Option Shares. Except as otherwise expressly provided herein, no adjustment
shall be made for dividends or other rights for which the record date is prior
to the date such stock certificate is issued.
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Options are not transferable otherwise than by will or the laws of
descent and distribution and are exercisable, during the lifetime of the
Grantee, only by the Grantee or, in the event of Grantee's legal disability, by
the Grantee's legal representative. The Grantee or his representative shall give
the Company notice of any transfer, specifying the name and address of the
transferee and the number and class of Options transferred.
(a) If, for any reason other than death or disability, Grantee's
Termination of Service occurs prior to the Expiration Date, such Options may be
exercised, to the extent of the number of shares and with the exercise price
with respect to which the Grantee could have exercised it on the date of such
Termination of Service, by the Grantee at any time prior to the earlier of (i)
the Expiration Date and (ii) two months after the date of such Termination of
Service.
(b) If Grantee becomes disabled (within the meaning of section
22(e)(3) of the Code) prior to the Expiration Date, and the Grantee's
Termination of Service occurs as a consequence of such disability, the Options
may be exercised, to the extent of the number of shares and with the exercise
price with respect to which the Grantee could have exercised it on the date of
such Termination of Service, by the Grantee at any time prior to the earlier of
(i) the Expiration Date and (ii) six months after the date of such Termination
of Service. In the event of the Grantee's legal disability, the Options may be
exercised by the Grantee's legal representative.
(c) If Grantee's Termination of Service occurs as a result of
death prior to the Expiration Date, or if the Grantee dies following his or her
Termination of Service but prior to the expiration of the period determined
under Sections 8(a) and (b) above, the Options may be exercised, to the extent
of the number of shares and with the exercise price with respect to which the
Grantee could have exercised them on the date of his or her death, by the
Grantee's estate, personal representative, or beneficiary who acquired the right
to exercise the Options by bequest or inheritance or by reason of the death of
the Grantee. Such post-death exercise may occur at any time prior to the earlier
of (i) the Expiration Date and (ii) one year after the date of the Grantee's
death.
(d) If the issuance of any shares of Common Stock on the
exercise of any Options pursuant to this Section 8 has not, at the time of such
exercise, been registered under the Securities Act, the Grantee or other person
exercising such Options shall execute and deliver such documents as the Company
may reasonably require to ensure compliance with the Securities Act and other
applicable securities laws, including acknowledgement that such shares are
"restricted securities" as defined in the regulations under the Act and are
acquired for investment purposes only and not with a view to resale or
distribution.
The number and kind of shares issuable on exercise of, and the exercise
price of, the Options represented hereby shall be subject to adjustment as
provided in the Plan.
The Company shall at all times reserve and keep available out of its
authorized Common Stock the full number of shares of Common Stock issuable upon
exercise of Options.
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(a) If at any time the Committee or the Board shall determine, in its
discretion, that the listing, registration, or qualification of any of the
Option Shares upon any securities exchange or under any state or federal law, or
the consent or approval of any governmental regulatory body, is necessary or
desirable as a condition of, or in connection with, the issue or purchase of
Option Shares, the Options may not be exercised in whole or in part unless such
listing, registration, qualification, consent, or approval shall have been
effected or obtained free of any conditions not acceptable to the Committee or
the Board, as applicable. Any notice of exercise of Options which would be
effective except for this Section 11 shall be deemed effective immediately upon
satisfaction of all such conditions (even if such notice could not otherwise
then have been given).
(b) The Company shall not be obligated to sell or issue any
Option Shares in any manner in contravention of the Securities Act, the Exchange
Act, or any state securities law. The Board may, at any time, require as a
condition to the exercise of Options that the Option Shares be acquired for
investment purposes only and that the certificate therefor contain a legend
restricting transfer.
All notices hereunder shall be in writing, and (a) if to the Company,
shall be delivered personally to the Secretary of the Company or mailed to its
principal office, addressed to the attention of the Secretary, (b) if to the
Grantee, shall be delivered personally or via courier or mailed via certified
mail, postage prepaid, return receipt requested to the Grantee at the address
first set forth above, or (c) if to any subsequent holder of Options or Option
Shares, to the address specified for such holder in the notice provided for in
Section 7 or on the stock records of the Company. Such addresses may be changed
at any time by notice from one party to the other.
All decisions or interpretations made by the Committee with regard to
any question arising hereunder shall be binding and conclusive on the Company
and the Grantee.
This Agreement shall bind and inure to the benefit of the parties
hereto and the successors and assigns of the Company and, to the extent provided
in Section 7, the executors, administrators, legatees, heirs, guardians, legal
representatives, successors, and assigns of the Grantee.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, without giving effect to rules governing the
conflict of laws.
Notwithstanding any other provision of this Agreement, the Options
granted by this Agreement shall be void and of no force and effect unless the
shareholders of the Company shall within twelve months after the Grant Date
approve the Plan. No Options may be exercised until the foregoing shareholder
approval is received.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
FIVE STAR PRODUCTS, INC.
By: /s/ JOHN C. BELKNAP
-------------------
Name: John C. Belknap
Title: President
/s/ RONALD KAMPNER
Ronald Kampner
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EXHIBIT A
FIVE STAR PRODUCTS, INC.
2007 INCENTIVE STOCK PLAN
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EXHIBIT B
EXERCISE NOTICE
The undersigned, pursuant to the foregoing Option Agreement (terms used
herein have the meanings as defined in the Option Agreement), hereby elects to
exercise Options for ____________ shares of Common Stock (the "Shares") at an
exercise price of $0.75 per share, and herewith (or as otherwise provided in the
Option Agreement) makes payment in full therefor pursuant to such Option
Agreement.
1. If the sale of the Shares and the resale thereof has not, prior to
the date hereof, been registered pursuant to a registration statement filed and
declared effective under the Securities Act of 1933 (the "Act"), the undersigned
hereby agrees, represents, and warrants that:
(a) I am acquiring the Shares for my own account (and not for
the account of others) for investment and not with a view to the
distribution or resale thereof;
(b) By virtue of my position, I have access to the same kind
of information which would be available in a registration statement
filed under the Act;
(c) I am a sophisticated investor;
(d) I understand that I may not sell or otherwise dispose of
such shares in the absence of either a registration statement under the
Act or an exemption from the registration provisions of the Act; and
(e) The certificates representing such shares may contain a
legend to the effect of (d) above.
2. If the sale of the Shares and the resale thereof has been registered
under the Act, the undersigned hereby represents and warrants that I have
received the applicable prospectus and all subsequent reports incorporated
therein by reference.
Very truly yours,
(type name under signature line)
Dated:
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